Why Everyone In Wall Street Seems Bullish On Under Armour Although Earnings Are Expected To Decline In Q2

Under Armour Inc UA is scheduled to announce its second quarter financial results on Thursday morning, before the market opens, and several major Wall Street research firms are previewing the figures.

According to Estimize, the Street is modeling consensus earnings of $0.05 per share (down 37.5 percent year-over-year) on revenue of $761.77 million (up 25 percent year-over-year).

SunTrust

SunTrust, for its part, is projecting earnings of $0.04, below consensus. However, the analysts feel optimistic about the company, as it continues to strengthen its connected fitness suite with the acquisition of Gritness, a group fitness app. They see this as “yet another step towards establishing UA as the leader in connected fitness.”

In addition, the company has recently seen several positive developments from its sponsored athletes including Stephen Curry's MVP Award and NBA Finals win, Jordan Spieth's Masters and U.S. Open wins, and Andy Murray's success in tennis. All of these developments “should help build on recent momentum at UA,” the firm assures, reiterating a Buy rating and $97.00 price target on the stock.

Sterne Agee CRT

Sterne Agee CRT also highlights the importance of the success of Under Armour sponsored athletes, reiterating a Buy rating and $95.00 price target on the stock. The firm is modeling earnings in-line with or above consensus, on slightly higher revenue growth (26 percent, to $767 million).

The stock remains Sterne’s #1 pick for long-term growth investors. The analysts explain that, “the core men's domestic wholesale business remains strong, but growth will be driven by women's & kids' apparel, footwear, DTC and international expansion.”

They add, “Necessary investments are and will be made to support the growth. The acquisitions of new digital platforms and ongoing innovation will continue to enhance the Under Armour brand's relationship with current athletes and soon-to-be athletes.”

BB&T

BB&T also expects earnings and revenues pretty much in-line with consensus. The firm reiterated a Buy rating on the stock and is boosting its price target to $98.00 on the back of several catalysts they see supporting the shares in the near-term. These drivers are:

1) Strong earnings for the second quarter

2) The upcoming stock split, expected to be ratified on August 26

3) Updated long-term guidance at UA’s upcoming Investor Day, scheduled for September 16.

Piper Jaffray

Piper Jaffray is also bullish on UA, and thus maintains an Overweight rating and $93.00 price target. The firm is also anticipating earnings in-line with consensus, on slightly lower sales – still up year-over-year.

The analysts believe the company is “benefiting from an overarching health & wellness mega-trend.” Moreover, a recent survey showed that UA’s app is the number one fitness app among teens in the U.S., and the experts think “these results speak to the longer-term digital opportunity.”

William Blair

Finally, William Blair maintains an Outperform rating on the stock, and expects earnings in-line with the Street’s consensus. The analysts see favorably the upcoming stock split, and see the company positioned for long-term growth.